ABC
Management
is
a
regional
Washington-area
property
management
firm
known
for
outstanding,
comprehensive
management
service
for
foreign-service
and
military
homeowners
stationed
overseas.
ABCs
management
place
a
high
priority
on
protecting,
maintaining,
and
collecting
on
the
residences
of
over
400
landlord-homeowner
clients.

Due
to
ABCs
success
in
serving
these
communities,
it
has
enjoyed
high
levels
of
client
loyalty
over
the
years,
as
well
as
steady
referrals
from
homeowners
and
area
Realtors.
The
tide
began
to
turn
in
early
2014,
however.
Whereas
ABCs
portfolio
had
been
growing
at
a
rate
of
about
eight
percent
each
year,
2014
marked
the
beginning
of
a
three-year
period
of
unprecedented
churn
and
stagnation.
During
2015
and
2016,
the
business
lost
valuable
longtime
clients
representing
four
percent
of
the
businesss
portfolio.
Furthermore,
a
growing
percentage
of
that
lost
business
comprised
luxury
homes
that
have
historically
leased
in
a
competitive
market
to
highly
desirable
tenants.
These
trends
have
become
a
cause
of
great
concern
to
ABCs
owners
and
management.

Following
a
performance
analysis
to
determine
the
causes
and
impact
of
the
lost
business,
it
was
determined
that
rising
levels
of
tenant
dissatisfactionand
concomitant
online
reputation
damagehave
played
a
significant
role
in
the
steady
stream
of
lost
business.
Three
interventions
are
proposed
in
this
business
case
to
increase
tenant
satisfaction.
The
suggested
interventions
include:
1)
Provide
(and
incentivize)
a
brief
online
tenant
education
module
to
establish
appropriate
expectations
and
policy
knowledge.
2)
Administer
quarterly,
anonymous
tenant
feedback
surveys
to
monitor
and
accommodate
tenant
needs,
and
3)
Complete
and
deploy
a
document-rich
tenant
portal
to
support
tenant
self-advocacy
and
access
to
records
and
covenants.

By
carrying
out
these
interventions,
ABC
will
be
able
to
achieve
its
goal
of
returning
to
a
state
of
near-zero
portfolio
churn
and
steady,
word-of-mouth
growth.

Nature
of
the
Learning
Challenge

Introduction

Founded
in
1985
by
two
real
estate
agent-investment
partners,
ABC
Management
in
Northern
Virginia
is
a
property
management
firm
that
provides
a
full
menu
of
residential
management
services
to
absentee
landlords.
Many
of
these
are
foreign
service
officers
or
military
personnel
stationed
overseas
for
years
at
a
time.
ABC
built
its
reputation
as
a
champion
for
absentee
homeowners,
providing
them
with
both
peace
of
mind
and
a
smooth
re-entry
when
they
return
to
live
in
their
homes
after
leasing
them.
This
strong
support
for
the
homeowner
has
earned
the
firm
excellent
word-of-mouth
referrals
from
within
the
communities
they
have
servedand
that
referral
network
was
enough
to
sustain
and
grow
ABC
into
a
portfolio
of
450
Northern
Virginia
homes
by
2013.
While
legal
and
contractual
responsibilities
to
tenants
were
taken
seriously,
serving
and
advocating
for
the
homeowner
client
has
always
taken
top
priority
in
both
the
firms
policies
and
organizational
culture.

Throughout
most
of
the
32
years
ABC
has
been
in
business,
the
Washington,
D.C.,
metropolitan
area
has
been
a
landlords
market.
As
a
result,
tenant
applicants
were
abundant,
and
it
was
a
fairly
simple
matter
to
screen
for
the
cream
of
the
crop
tenants.
Additionally,
if
a
tenant
had
a
complaint,
little
handling
was
required.
Either
the
staff
either
addressed
it
(according
to
the
terms
of
the
lease),
or
they
informed
the
tenant
their
complaint
fell
outside
the
landlords
or
property
managers
scope
of
responsibility.
The
common
refrain
was,
Read
your
lease!
Most
tenants
accepted
this
matter-of-fact,
non-advocating
style:
It
was
fairly
typical
of
management
firms,
and
besides,
most
tenants
did
not
want
the
headache
of
seeking
(and
competing
for)
new
housing.

Current
State
Changes
in
the
Market
and
the
Competition

With
the
entrance
of
new
competitors
to
the
market
(some
of
whom
enjoyed
better
connections
to
the
U.S.
Department
of
State
network),
ABC
was,
by
2014,
seeing
its
portfolio
begin
to
shrink.
Furthermore,
residential
rentals
like
single
family
homes
and
townhouses
began
to
see
stiffer
rental
market
competition
from
urban
apartment
complexes
offering
free-rent
incentives
and
sought-after
lifestyle
amenities.
The
firms
managing
partner
realized
he
could
no
longer
grow
the
business
based
on
word
of
mouth
referrals;
nor
could
he
keep
his
rents
at
a
premium
without
top-tier
tenants.
He
decided
to
become
more
systematic
about
digital
marketing
methods.
To
that
end,
he
retained
Digital
Scribes,
a
sole
proprietorship
search
and
content
marketing
consultancy,
to
do
the
following:
Improve
ABCs
organic
rankings
in
Google
search.
Generate
and
close
more
leads
through
the
firms
website.
Introduce
pay-per-click
(PPC)
search
marketing
campaigns.
Reach
area
real
estate
agents
with
incentives
to
show
ABC
properties
to
their
clients
seeking
rental
management.

The
Initial
Discovery
Process

Immediately
after
Digital
Scribes
was
retained
by
ABC
Management
in
December,
2014,
I
conducted
a
discovery
process
involving
both
a
website/analytics
audit
and
an
external
review
of
online
reputation
and
links
to
the
website.
I
realized
the
client
had
a
healthy
web
presence
(including
an
A+
grade
from
the
Fairfax
Better
Business
Bureau)
but
a
slew
of
negative
reviews
on
Yelp
and
Google.
The
one-
and
two-star
reviews
came
almost
entirely
from
angry
tenants
who
felt
the
firm
did
not
look
out
for
their
interests.
Website
analytics
revealed
that
while
organic
traffic
from
area
prospective
clients
was
growing,
first-time
visitors
were
returning
30
percent
less
frequently
than
first-time
visitors
one
to
two
years
earlier.
(See
Appendix
A.)
Surveys
of
real
estate
agents
who
had
worked
historically
with
the
firm
revealed
some
agents
were
alarmed
by
the
firms
poor
Yelp
and
Google
reviews.
(See
Appendix
B.)
While
no
agent
said
they
discouraged
a
client
from
using
the
firm,
it
appears
likely
that
agents
communicated
their
reputation
concerns
to
clients.

Online
Reputation
Becomes
a
Problem

My
initial
online
reputation
campaign,
which
lasted
between
mid-2015
and
mid-2016,
included
soliciting
regular
positive
reviews
from
both
owners
and
tenants
who
had
had
recent
positive
interactions
with
ABC
Management.

While
these
efforts
helped
raise
the
aggregate
review
scores
and
online
profile
of
the
firm,
negative
reviews
continued
to
trickle
in,
undermining
the
positive
ones.
(See
Appendix
C
for
a
representative
sampling
of
the
firms
online
reviews.)
Throughout
2016,
ABCs
owner
reported
he
was
having
increasing
difficulty
attracting
the
top-tier
tenants
he
wanted
to
place
in
the
managed
properties,
and
many
owners
were
expressing
dissatisfaction
over
their
houses
sitting
vacant
or
the
lower-than-expected
quality
of
lease
applicant
pool.
While
my
search
marketing
efforts
did
increase
the
number
of
website
visitors
and
leads,
it
was
often
a
struggle
for
the
owner
and
operations
director
to
close
those
leads.
According
to
research
the
client
did
(using
rental
data
from
the
MRIS
local
multiple
listings
service),
one-third
of
the
prospective
clients
who
had
requested
contracts
were
signing
with
rival
management
firms
at
that
last-minute
stage.
By
the
end
of
2016,
ABC
was
no
longer
shrinking,
but
it
was
not
growing,
either.

The
Crisis
Becomes
Evident

In
December,
2016,
and
early
January,
2017,
a
succession
of
tenants
gave
extremely
negative
reviews
online,
repeating
complaints
often
made
by
tenant
reviewers
over
the
past
several
years.
(Most
complaints
relate
to
not
getting
full
refunds
of
security
deposits.)
Aggregate
ratings
dropped
from
3.8
to
2.4
stars
on
Yelp
and
4
to
3.4
stars
on
Google
Business.
In
the
month
that
followed,
we
observed
the
same
relationship
between
lower
ratings
and
reduced
returning-visitor
website
traffic.
In
late
January,
the
business
owner
acknowledged
that
there
is
a
clear
relationship
between
tenant
reviews
online
and
the
overall
health
of
his
business.
Further,
he
requested
help
in
fully
identifying
and
addressing
the
causes
of
the
now-established
pattern
of
reviews
left
by
angry
tenants.

Business
Case
Purpose:

The
purpose
of
this
business
case
is
to
further
analyze
the
causes
and
impacts
of
tenant
dissatisfaction
and
develop
potential
interventions
to
improve
tenants
experience,
from
lease-application
stage
through
final
checkout
and
disposition
of
the
security
deposit.
While
the
most
urgent
business
concern
at
present
is
to
improve
ratings
on
Yelp
and
Google
(and
thus
keep
and
attract
more
owner
clients),
it
is
the
business
owners
hope
that
improving
tenant
satisfaction
will
strengthen
the
overall
health
of
the
business.

Causes
of
Problem

In
order
to
better
understand
the
causes
and
the
impact
of
the
low
tenant
reviews,
a
performance
analysis
was
conducted
which
began
with
interviews
of
six
key
employees
(the
principal
broker,
the
operations
director,
the
property
inspector,
the
leasing
director,
and
two
administrative
staff
members),
regarding
their
interactions
with
tenants.
I
gathered
their
observations
on
a
range
of
interactions,
from
application/leasing,
to
residency,
to
end-of-lease
events.
(Representative
sound
bites
from
these
interviews
can
be
found
in
Appendix
D.)
The
performance
analysis
also
included
review
of
all
tenant-submitted
maintenance
and
feedback
forms
from
the
past
two
years,
responses
from
an
emailed
survey
of
current
tenants,
and
a
thorough
review
of
all
online
commentaries
accompanying
ratings
(including
the
ones
removed
by
Yelp
for
violations
of
terms
of
service).
While
some
causes
of
tenant
dissatisfaction
related
to
very
specific
issues
with
a
property
(and
appeared
to
have
been
fully
resolved
by
repairs),
most
fell
into
one
of
the
following
four
categories.

Confusion
Regarding
Tenant
Responsibilities

This
is
by
far
the
most
common
grievance
mentioned
by
past
tenants
in
negative
reviews.
Strictly
speaking,
ABC
Management
has
meticulously
observed
legal
and
contractual
obligations
to
tenants
when
it
came
to
handling
of
security
deposits,
escrow,
and
other
rental
financial
matters.
However,
tenants,
due
to
their
unfamiliarity
with
the
fine
print
of
their
leases,
perceived
that
ABC
was
unjustly
taking
their
money.
It
seemed
unfair
to
many
tenants
that
they
could
have
a
relatively
problem-free
tenancy
for
one
to
two
yearsand
then
suddenly
learn
that
a
substantial
portion
of
their
security
deposit
would
not
be
refunded
because
of
failure
to
perform
cleaning
and
other
check-out
responsibilities
as
stipulated
by
their
lease.
Furthermore,
these
kinds
of
surprises
came
at
exactly
the
time
the
tenants
most
needed
their
money.
Financial
surprises
of
this
nature
lead
to
enormous
angerespecially
when
a
complaint
is
met
with
the
typical
response
of,
You
should
have
read
your
lease.

While
deductions
from
security
deposits
are
the
most
important
cause
of
past
tenant
dissatisfaction,
current
and
past
tenants
complain
of
a
lack
of
clarity
about
such
matters
as
the
following:
Responsibilities
following
HOA
violation
reports,
Responsibilities
relating
to
gutter-cleaning,
landscaping,
and
furnace
filter
and
lightbulb
replacements.
Responsibility
to
make
the
property
available
for
showings
to
future
tenants.

One
additional
note
related
to
lease
policies
is
that
ABC
tenants
are,
increasingly,
young
professionals
in
their
20s.
(Until
about
2012,
the
average
tenant
age
for
townhouses
and
single
family
homes
was
30.
Currently,
the
average
tenant
age
is
26.)
For
many
tenants,
this
is
their
first
post-university
experience
with
a
lease.
For
others,
its
their
first
experience
with
a
managed
single-family
home,
which
tends
to
have
more
items
to
take
care
of
than
an
apartment.
The
combination
of
high
($2,000-plus)
security
deposits
over
and
multiple
responsibilities
means
theres
plenty
of
room
for
inexperienced
tenants
to
make
costly
errors.

Lack
of
Account
Transparency
and
Online
Access
to
Documents

Related
to
the
first
problem
is
a
lack
of
tenant
access
to
electronic
document
files.
Tenants
are
expected
to
keep
paper
copies
of
their
lease
after
signingunlike
homeowners,
who
have
a
dedicated
secure
online
portal.
So,
when
staff
says
to
a
tenant,
You
should
read
your
lease,
its
not
always
instantly
available
for
reference.
Its
evident
from
a
glance
at
the
website
that
owners
have
a
portal,
whereas
tenants
do
not.
Here
again,
tenants
conclude
they
are
second-class
citizens.
The
lack
of
a
secure
tenant
portal
area
has
been
a
concern
that
ABC
dedicated
substantial
resources
to
address
in
2014.
A
developer
they
hired
simply
never
finished
the
custom
portal,
and
the
disappearance
of
the
developer
(who
left
no
documentation
behind)
had
a
paralyzing
effect
on
the
owner.
He
felt
stuckand
reluctant
to
pay
more
money
for
the
work.
At
my
urging,
a
freelance
WordPress
developer
was
budgeted
for
and
hiredand
the
portal
awaits
final-stage
development,
review,
and
approval.
(See
Appendix
E
for
Gantt
chart
of
portal
development
process
and
current
phase.)

Cumbersome,
Outdated
Lease
Application
Process

Some
tenants
complain
that
their
very
first
impression
of
ABC,
beginning
with
the
lease
application
process,
led
them
to
consider
the
firm
somewhat
outdated
in
their
practices,
as
well
as
unconcerned
about
tenant
convenience.
Tenants
are
asked
to
submit
social
security
and
other
sensitive
information
using
a
print-sign-scan-email
process
rather
than
a
secure
document
processing
app
such
as
DocuSign.

Perception
of
Staff
as
Unhelpful

Both
feedback
from
existing
tenants
and
text
of
online
reviews
cite
unhelpful
(or
even
rude)
treatment
by
ABC
staff.
The
employees
say
they
are
often
approached
rudely
or
in
an
unreasonably
demanding
or
entitled
way
by
tenantsand
that
they
(the
employees)
push
back
because
they
should
not
have
to
put
up
with
that.
Some
of
the
tenants
who
left
the
most
negative
reviews,
it
turned
out,
had
had
increasingly
hostile
interactions
with
staff
over
a
period
of
several
months.

Summary

ABC
Management
is
failing
to
grow,
in
part,
because
of
dissatisfied
tenants
who
use
online
review
sites
to
register
their
complaints.
The
reasons
for
tenant
dissatisfaction
relate
in
large
part
to
a
lack
of
understanding
of
their
contractual
responsibilities
(resulting
in
anger
over
lost
security
deposit
funds);
as
well
as
a
sense
that
their
needs
(security,
account
visibility,
staff
advocacy)
are
not
taken
seriously
by
the
firm.
Challenges
include
1. While
owners
have
a
dedicated
account
portal
for
ease
of
document
access,
tenants
do
not.
2. Outside
of
the
lease
fine
print,
no
tenant
education
takes
place
to
ensure
tenants
have
control
over
their
security
deposit
refund.
For
many
tenants,
the
deposit
is
critical
to
their
ability
to
move
to
their
next
rental
or
to
make
a
down
payment
on
a
home.
3. Staff
members
sometimes
communicate
to
tenants
(especially
when
tenants
approach
them
in
an
angry
or
demanding
way)
that
tenant
concerns
take
a
lower
priority
than
homeowner
concerns.
4. First
impressions
during
the
lease
application
process
are
that
tenant
convenience
and
online
security
are
unimportant.

The
business
case
will
outline
three
suggested
interventions
that
address
the
first
two
challenges.
The
implementation
of
the
interventions
will
make
up
the
Tenants
Are
Clients
Too!
(TACT)
customer
service
improvement
program,
and
it
is
hoped
that
management
will
consider
addressing
the
third
and
fourth
challenges
listed
here
after
results
from
the
first
quarterly
tenant
survey
have
been
compiled
and
prepared
in
a
report.

Alternatives
to
Consider

The
first
alternative
enumerates
three
interventions,
in
order
of
priority,
that
can
be
considered
the
essential
introduction
to
ABCs
TACT
program.
The
second
alternative
is
to
continue
on
doing
business
as
usual,
without
any
interventions.
My
recommendation
would
be
to
implement
the
three-pronged
intervention
package,
so
as
to
quickly
and
inexpensively
address
some
of
the
primary
causes
of
tenant
dissatisfaction,
as
well
as
provide
a
means
of
adapting
online
training
and
tenant
portal
according
to
ongoing
feedback.
In
my
role
as
a
digital
marketing
consultant,
I
am
able
to
fully
support
all
three
of
these
proposed
interventions.

A
Short
Online
Tenant
Education
Module

The
objective
of
the
e-learning
module
is
to
provide
tenants
with
a
convenient
primer
on
what
their
rights
are,
how
to
request
service,
how/when
to
take
care
of
things
in
the
property,
and
how
to
get
a
full
refund
of
their
security
deposit.
Tenants
would
be
incentivized
to
take
the
course
through
an
offer
of
a
$100
first
months
rent
discount
for
successful
completion.
Questions
would
guide
tenants
through
avoidable
problems
and
costs
associated
with
common
tenant
oversights.
(For
proposed
online
tenant
education
module
content,
see
Appendix
F.)

Quarterly
Tenant
Feedback
Surveys

Currently,
tenant
satisfaction
surveys
are
not
undertaken
on
any
regular
basis.
While
a
feedback
form
is
always
available
on
the
website,
it
is
rarely
ever
used
by
tenants.
Tenants
should
have
opportunities
to
register
problems
and
requests
for
service
improvements
or
changes
several
times
during
a
one-year
lease
period.
The
survey
would
be
emailed
to
all
tenants
on
ABCs
email
list.
It
would
also
be
advertised
through
a
splash
page
message
when
tenants
access
their
rent
payment
portal.
Through
emailed
feedback
surveys,
difficulties
with
particular
employees
might
also
be
identified
and
addressed.
(For
proposed
tenant
feedback
survey,
see
Appendix
G)

A
Document-Rich
Tenant
Portal

This
intervention
is
actually
already
near
completion.
In
January,
the
owner
managed
to
obtain
enough
information
and
documentation
from
the
previous
developer
to
allow
me
to
create
an
RFP
for
development
of
a
new,
easy-to-manage
WordPress
gated
site.
The
new
site,
due
for
mid-May
release,
will
combine
owner
and
tenant
functions
into
a
single,
secure
account-access
portal.
Tenants
will
be
able
to
access
digital
versions
of
their
signed
leases,
as
well
as
account
statements,
HOA
notices,
and
quarterly
home
inspection
reports.
(Note:
The
online
tenant
module
will
demonstrate
for
tenants
how
to
use
the
tenant
portal
and
what
documents
are
available
to
them
there.)

Alternative
2:
Doing
Nothing

Another
alternative
is
to
do
nothing
and
to
allow
the
status
quo
of
low
tenant
satisfaction
to
continue.
Tenants
would
continue
to
experience
lack
of
clarity
about
their
responsibilities
and
the
terms
of
their
leases.
They
would
continue
to
pay
rent
online
but
have
no
account
management
portal
or
web
access
to
their
documents.
Finally,
they
would
continue
to
experience
outrage
over
not
getting
full
security
deposit
refundsand
would
thus
continue
to
leave
one-
and
two-star
ratings
on
major
review
sites.

Over
time,
its
likely
that
ABC
would
have
a
harder
and
harder
time
attracting
qualified
tenantsand
would
thus
continue
to
lose
homeowner
clients
to
their
competition.
Worsened
online
ratings
profiles
over
time
would
lead
to
higher
marketing
costs.

Assumptions
and
Risks

This
section
outlines
the
assumptions
and
potential
risks
involved
with
implementation
of
each
intervention.

Assumptions
The
assumptions
to
implement
the
plan
are
as
follows:

ABC
Management
will
agree
to
implement
all
three
of
the
proposed
interventions.
The
developer
who
has
done
75
percent
of
the
tenant
portal
will
complete
the
portal
to
specs,
within
the
agreed-upon
timeframe.
ABC
Management
will
dedicate
the
resources
needed
to
create
the
training.
ABC
Management
will
get/maintain
a
subscription
to
SurveyMonkey
and
administer
quarterly
tenant
surveys,
so
that
tenant
satisfaction
can
be
gauged,
online
training
be
modified
if
necessary,
and
staff
training
interventions
considered
at
a
later
date.
Senior
Management
will
model
an
attitude
for
staff
that
demonstrates
regard
for
tenants
as
valued
clients.
Employees
will
be
included
in
the
process
and
will
be
given
opportunities
to
offer
ideas
and
feedback
on
successfully
addressing
common
tenant
complaints
and
knowledge
deficits.

Risks
Online
Tenant
Education
Module

There
is
little
risk
associated
with
this
intervention.
Development
cost
for
a
short
(20-minute)
module
is
low
(under
$1,200),
and
tenant
incentives
are
likely
to
cost
less
than
$3,000
per
year.
Its
possible
a
module
would
be
developed
but
not
sold
by
staffor
that
tenants
might
not
consider
the
monetary
incentives
offered
worth
their
time.

Document-Rich
Tenant
Portal

The
financial
risk
for
this
intervention
is
small
and
lies
mainly
in
the
remaining
development
costapproximately
$1,800.
(A
total
of
$3,200
has
already
been
spent
on
development
of
a
WordPress-based
secure
portal,
as
well
as
a
specialized
script
for
regularly
updating
its
database
with
the
tenant
documents
staff
scans
in
daily.)
Tenants
have
long
requested
a
dedicated
portal,
and
most
are
digital
natives
comfortable
with
accessing
documents
online,
so
its
unlikely
the
portal
will
go
unused.
If
staff
do
not
do
the
job
of
regularly
scanning
and
uploading
the
documents,
tenants
might
experience
frustration
in
having
a
portal
that
does
not
contain
their
files.
However,
staff
are
already
used
to
performing
these
tasks
for
owners,
so
the
risk
of
their
failing
to
process
tenant
documents
is
low.

There
is
also
a
risk
that
tenants
would
not
use
the
portal
due
to
lack
of
knowledge
of
its
existence.
That
risk
would
be
addressed
in
the
proposed
tenant
education
online
module.

Quarterly
Tenant
Feedback
Surveys

The
cost
of
the
proposed
SurveyMonkey
plan
is
minimal--$300
for
the
year.
By
using
surveys,
ABC
saves
timebut
they
might
run
the
risk
of
not
getting
high
response
rates.
If
surveys
fail
to
yield
a
healthy
sampling
of
responses,
ABC
could
seek
additional
means
of
obtaining
tenant
feedback,
such
as
social
media
outreach
and
personal
emails
from
the
owner.
The
risk
of
these
means
of
outreach
would
be
in
terms
of
owner
and
staff
time
rather
than
money.

Doing
Nothing

The
risk
of
doing
nothing
is
continuing
to
stagnate
or
possibly
to
begin
to
steadily
lose
business.
Negative
tenant
reviews
have
accelerated
over
the
past
year,
and
there
are
no
signs
the
onslaught
of
one-
and
two-star
reviews
will
stop
on
their
own.
Eventually,
there
will
be
too
many
to
counteract
through
the
occasional
positive
reviews,
and
competitors
with
shinier
online
profiles
will
beat
ABC
in
the
online
lead
game.
Its
also
possible
that
some
tenants
will
take
their
complaints
from
Yelp
to
the
Better
Business
Bureau,
which
could
lead
the
business
to
lose
the
A+
BBB
rating
that
has
helped
them
get
business
since
1985.

Financial
Metrics
and
Measures

The
Business
Cost
of
Tenant
Dissatisfaction

Below,
I
have
presented
in
narrative
form
how
I
have
arrived
at
the
relevant
figures
to
allow
measurement
of
financial
costs
of
both
alternatives:
1)
implementing
the
proposed
intervention,
or
2)
pursuing
business
as
usual.
Following
the
discussion,
I
have
summarized
my
cost
findings
in
the
form
of
tables.

Client
Lifetime
Value

The
average
lifetime
value
of
a
residential
homeowner
client
is,
according
to
ABCs
owner
and
principal
broker,
$13,000.
However,
its
worth
noting
that
20
percent
of
clients
own
homes
that
rent
for
more
than
2x
the
average
area
rent.
For
those
clients,
lifetime
value
may
be
as
high
as
$30,000.

Annualized
Value
of
Lost
Business

Since
a
typical
homeowner
is
a
client
for
36
months,
average
client
value
can
be
annualized
as
$4,333.
For
those
in
the
high-rent
group,
average
annual
value
can
be
annualized
as
$10,000.
During
2015
and
2016,
ABC
lost
a
total
of
17
clients:
7
in
2015
(with
one
in
the
high-rent
group)
and
10
in
2016
(with
two
in
the
high-rent
group.
This
constitutes
losses
of
$35,500
and
$62,500
respectivelyand
a
total
of
$98,500
across
the
two
years.
The
financial
value
of
lost
business
has
thus
averaging
out
to
approximately
$50,000
per
year
over
the
past
two
years.

Replacing
Lost
Accounts:
Cost
Per
Acquisition

The
average
cost
per
acquisition
(CPA)
of
a
new
client
has
historically
been
close
to
zero,
because
word-of-mouth
referrals,
plus
organic
search
engine
rankings,
brought
most
of
the
new
business.
However,
during
2015
and
2016,
the
average
CPA
rose
substantially,
mainly
due
to
the
necessity
of
mounting
pay-per-click
(PPC)
Google
Adwords
campaigns
in
addition
to
targeted
SEO
campaigns.
Therefore,
the
cost
of
replacing
lost
clients
in
2015
and
2016
was
approximately
$6,000
per
year.

The
total,
annualized
costs
of
lost
client
accounts
and
replacement
of
those
accounts
is
thus
$56,000.
But
how
much
of
that
could
be
said
to
be
directly
attributable
to
tenant
dissatisfaction
and
negative
tenant
reviews?

Lost
Business
Attributable
to
Tenant
Dissatisfaction
and
Negative
Online
Reviews

When
a
homeowner
decides
not
to
renew
their
annual
contract,
the
principal
broker
calls
them
to
try
to
learn
the
reasons.
During
2015
and
2016,
14
of
the
17
lost
clients
(82
percent)
cited
vacancy
problems
relating
to
difficulties
finding
qualified
tenant
applicants.
Three
of
the
lost
clients
simply
no
longer
needed
property
management
services.
All
of
the
higher-rent
clients
were
in
the
group
that
cited
vacancy
problems
as
their
main
reason
for
seeking
another
management
company.
Thus,
a
conservative
estimate
of
the
annual
financial
costs
due
to
a
decreased
tenant
pool
is
82
percent:
or
$41,000.

According
to
ABCs
leasing
manager,
many
prospective
tenants
report
they
chose
not
to
apply
due
to
negative
reviews
on
Yelp
and
Googleand
that
they
were
troubled
by
both
the
low
ratings
well
as
the
large
number
of
reports
of
lost
security
deposits.
When
I
asked
the
leasing
manager
for
a
percentage
(based
on
the
ones
who
give
a
reason),
she
said
three
out
of
four.
Assuming
75
percent
of
the
reason
for
the
decreased
tenant
pool
is
negative
online
reviews,
the
annual
cost
of
dissatisfied
tenants
to
ABCs
business
is
$34,720.
Based
on
the
two-year
trajectory,
it
appears
this
figure
may
continue
(as
a
conservative
estimate)
to
rise
by
20-35
percent
per
year,
if
no
interventions
are
made
and
negative
reviews
continue
to
depress
the
average
ratings.

As
the
analysis
below
shows,
full
implementation
strategy
costs
listed
below
are
well
below
the
costs
to
the
company
of
maintaining
business
as
usual.
Whereas
the
annual
cost
of
dissatisfied
tenants
has
been
determined
to
be
at
least
$34,720
per
year
(growing
by
a
minimum
of
$6,900
per
year),
the
annual
cost
of
the
package
of
three
interventions
is
$13,500.
(Following
the
first
year
of
implementation,
the
cost
of
maintaining
these
interventions
is
projected
to
be
approximately
$2,000
less,
due
to
the
decreased
development
costs.)

Cost
of
Full
Implementation
of
the
Three-Part
Intervention
Strategy

This
scenario
captures
the
costs
of
implementing
interventions
across
just
an
initial
12-month
period:
from
June,
2017,
to
May,
2018.

Total
(First-Year)
Cost
for
Full

Implementation
$13,500

Cost
of
Doing
Nothing

By
deciding
to
maintain
the
status
quo
and
do
nothing,
ABC
is
expected
to
continue
to
lose
clients
at
the
current
rate
(or
at
an
increased
rate).
Marketing
expenses
would
be
expected
to
rise,
as
lead
conversion
rates
continue
to
worsen
and
cost
per
acquisition
(CPA)
rises.

Complete
and
promote
the
secure
tenant
document
portal.

Conduct,
compile,
and
report
to
management
on
quarterly
tenant
surveys.

This
course
of
action
would
significantly
contribute
to
the
achievement
of
ABCs
aims
of
improving
its
online
reputation,
attracting
top
tenants,
keeping
its
current
client
base,
reducing
churn,
and
growing
the
business.
The
current
loss
of
homeowner
clients,
which
amounts
to
approximately
$50,000/year,
will
be
greatly
reduced.
Employees
ability
to
do
their
jobs
without
recurring
tenant
conflicts,
will
be
improvedas
will
employees
ability
to
work
without
fear
of
damaged
individual
reputations.
While
this
implementation
plan
does
not
include
a
formal
employee
performance
improvement
program,
the
quarterly
tenant
feedback
component
does
allow
for
a
natural
development
of
coaching
and
training
at
a
later
date.
Homeowner
clients
will
have
a
greater
security
in
continuing
to
do
business
with
ABC,
knowing
that
the
firm
attracts
a
qualified
pool
of
tenants
and
that
they
need
not
fear
the
income
loss
due
to
prolonged
vacancy.

In
short,
full
implementation
addresses
the
challenges
discussed
throughout
the
business
case:

Tenants
improved
access
to
knowledge--and
the
documents
that
outline
their

contractual
responsibilities--will
help
stop
unexpected
loss
of
security
deposits.
Tenants
improved
experience
and
confidence
in
ABC
will
allow
for
greater
tenant
satisfaction.
ABCs
loss
of
accounts
and
related
revenues
will
be
reduced
due
to
improved
tenant
satisfaction
and
a
reduction
of
damaging
online
reviews.
Existing
clients
and
prospective
clients
can
have
confidence
that
ABC
is
a
reputable
business
that
attracts
good
tenants.
Managers
and
staff
will
have
the
ability
to
determine
ongoing
tenant
education
and
tenant
service
priorities,
based
on
regular
feedback
from
tenants.
They
can
thus
establish
tenant
support
goals
on
a
quarterly
basis.

High-Level
Implementation
Plan

Full
Implementation

Step
Description
Timeframe

13. Tenant
Document
ABC
approves,
and
portal
launches,
with
May
24
May
31,
2017
Portal
Final
Review
and
email
and
registration
info
sent
to
all
Approval
tenants.

By
deciding
to
maintain
the
status
quo
and
not
remediate
tenant
satisfaction
problems,
ABC
will
have
to
put
a
break-even
business
acquisition
plan
into
effect.
While
the
management
would
have
to
meet
to
agree
on
the
best
course
of
action,
the
plan
would
necessarily
rely
on
marketing
tactics
to
increase
overall
number
of
homeowner
leadsand
would
assume
lead
conversion
rates
similar
to
the
current
5
percent
closed
leads
from
rental
market
analysis
form
submission.
The
following
represent
the
kinds
of
actions
that
would
be
logical:
Aggressive
PPC
marketing
campaigns
to
targeted
localities
that
have
high
numbers
of
rentals
and
a
large
military
population.
Appeals
to
satisfied
homeowner
clients
to
leave
positive
reviews
online.

Evaluation
Plan

In
order
to
evaluate
the
success
of
the
business
interventions
being
implemented,
ABC
will
develop
and
monitor
a
set
of
metrics
related
to
tenant
satisfaction
measurement.
ABCs
annual
rate
of
clients
lost
to
other
management
companies
will
decrease
from
the
current
3
percent
(12
properties)
to
1.5
percent
(6
properties)
in
FY
2017,
and
to
.5
percent
(0-2
properties)
in
FY
2018.
Within
one
year
of
the
interventions
being
implemented,
lease
application
rates
for
vacant
rentals
will
increase
by
25
percent.
Within
two
years
of
implementation,
lease
application
rates
will
increase
by
50
percent.
Within
one
year
of
the
interventions
being
implemented,
negative
tenant
reviews
(3
stars
or
less)
on
Yelp!
And
Google
will
decrease
by
50
percent.
Within
two
years
of
implementation,
negative
tenant
reviews
will
decrease
by
90
percent.
Within
one
year
of
gathering
quarterly
survey
feedback
from
tenants,
aggregate
satisfaction
ratings
will
improve
by
20
percent
(i.e.,
from
an
average
of
3/5
to
an
average
of
4/5).
Within
15
months
of
the
interventions
being
implemented,
at
least
three
satisfied
tenants
will
agree
to
leave
positive
reviews
on
Yelp!
and/or
Google.

Appendices

Appendix
A:
Key
Analytics
Findings

Appendix
Table
1:
Notice
that
even
as
visits
to
business
acquisition
website
pages
go
up
(2015),
return
visits
are
going
down.

Appendix
B:
Real
Estate
Agent
Survey
Feedback

Appendix
Table
2:
Area
agents
were
surveyed
after
they
entered
a
drawing
sponsored
by
the
property
management
firm.
A
total
of
40
survey
responses
were
collected.
Many
left
the
comments
area
blank.
This
table
represents
a
sampling
of
those
who
explained
why
they
would
or
would
not
be
willing
to
recommend
the
firm
to
homeowner
clients
looking
for
management
services.

Appendix
C:
Sampling
of
Tenant
Online
Reviews,
2013-2015

Appendix
D:
Notes
from
Staff
Interviews

The
following
sound
bites
from
staff
interviews
represent
some
key
takeaways
from
that
discovery
process:
Staff
were
asked
different
questions,
depending
on
their
rolebut
each
one
was
asked
about
common
tenant
problems
or
questions
they
encounter.

Admin
1:
When
they
tell
me
somethings
unfair,
I
tell
them
they
should
have
read
the
lease!

Admin
2:
Tenants
can
be
downright
abusive.
After
one
used
my
first
and
last
name
in
an
online
review,
I
dont
even
tell
them
my
name
over
the
phone
anymore.

Leasing
Agent:
Sometimes,
in
a
group
of
tenants,
one
of
them
will
read
the
lease,
but
everyone
else
in
the
group
just
comes
in
at
odd
times
to
give
their
part
of
the
security
deposit,
and
Im
pretty
sure
they
never
took
the
time
to
even
read
over
the
lease.

Property
Inspector:
Tenants
always
say
they
didnt
cause
the
damage,
but
I
take
lots
of
pictures.
Believe
me,
the
damage
was
never
there
when
they
moved
in.
I
tell
them
they
should
have
planned
ahead
to
get
if
fixed
before
check-out,
but
they
just
argue
with
me.
Its
no
use
at
that
point.
Theyre
angry.

When
it
comes
to
HOA
violations,
sometimes
the
tenants
just
dont
even
respond.
Then
theyre
surprised
when
they
get
charged
for
the
fixes..

Operations
Director:
I
do
my
best
to
make
sure
the
maintenance
issues
get
addressed
right
away,
but
sometimes
I
swear
these
people
leave
reviews
that
complain
about
things
I
never
even
got
a
request
about.

Principal
Broker:
Why
dont
these
people
just
read
their
lease?
Its
right
in
there
that
they
are
supposed
to
get
the
gutters
and
chimney
cleaned
by
an
approved
vendor.
I
dont
understand
how
they
could
run
down
our
reputation
online
when
its
really
their
fault
for
not
reading
their
lease.

Appendix
E:
Gantt
Chart
Depicting
Tenant
Portal
Development
to
Date

Appendix
Table
3:
Portal
is
close
to
deployment.
Only
one
developer
payment
remains.
The
WordPress
framework
will
make
it
easy
to
manage
and
modify,
to
make
for
a
smooth
user
experience.

Appendix
F:
Proposed
Tenant
Education
Module

(The
following
content
outline
would
guide
development
of
a
20-minute
module
developed
in
Articulate
Storyline
and
deployed
on
the
clients
website.)

Tenant Education Module: ABC Management Content Outline

Introduction: Three quick opening scenarios are presentedlearners will probably see themselves in at least one of these, and each will present similar circumstances in which tenant(s) felt they were doing their best and were honoring their leasebut then were shocked to learn they would only receive a partial refund of their security deposit.

Joes story. A group of tenants (not related to one another) sharing a place together. Joe had paid the security deposit, but then the two other housemates left early, and Joe was left holding the bag to clean up everything. That bothered him, but after a weekend of doing a full cleaning, he felt sure that the immaculate house she was leaving behind would merit a full refund of his deposit. (The problem: Joe left a clean house, but he never called a chimney sweep or a gutter cleaner from the approved vendor list. As a result, he had charges totaling $400 deducted from his deposit.)

Shannons story. A single parent. Shannon has her hands full with a full-time government job, a commute to downtown DC each day, and a toddler to take care of. When the time comes to move out of her rental, she hires a professional cleaner to make sure a thorough job is done. She also arranges for approved vendors to come service the fireplace and clean the gutters. She has installed baby gates throughout the house and has also hung lots of shelving to organize toys and clothes. When she takes down the gates and fixtures, shes in a hurry. She doesnt give much thought to all the holes and dents in the wallsand she notices some light bulbs in the basement that are burned out. But she figures since she never really used that room much, she shouldnt have to replace those expensive floodlight bulbs. Later, when she realizes $275 has been deducted from her security deposit, she is bewildered. Why so much money for a little drywall patching and screwing in a few light bulbs???

Kevin and Glorias story. A young couple. Kevin and Gloria are planning to use the returned security deposit toward the down payment on their first home. Its a big deal. Theyve taken great care of their rental and are proud of that fact. Theyre busy professionals who tend to get home later in the evenings. They havent spent time in the backyard in months, and they were so busy making sure the house was ready for checkout that they failed to notice the tall grass and overgrown weeds in the backyard. Later, when they get all but $350 of their security deposit back. They wonder why it cost so much to do a little mowing and trimming? Was the property management firm profiting from their deposit?

Section 1: Security Deposit Basics: How the security deposit works, what laws govern it, and ABC want you to get it all back! Legal nature of the escrowed deposit. o We'll address both Virginia Landlord Tenant law and The reason for the deposits existence. (As a strictly regulated, escrowed account, it's not a profit center. It exists to protect the owner.) o The seriousness of any property manager profiting from a tenants security deposit. (A managers real estate license is at stake.) The firm never profits from security deposits, it is only custodian of them. In an effort to steer clear of these kinds of profit incentives, ABC has a policy of receiving no referral commissions or cuts from vendors we send to service the property. Why charges are made at checkout: o If checkout isn't done properly, vendors perform those services--and charge for their time, as well as their service call minimums! o If items must be replaced, the property management firm must charge for those items (and for the time of the vendor who will go to install them). Section 1 Assessment: o Quiz on how security deposits work (T/F and Multiple Choice) o Link to feedback form to ask a question about the firms security deposit policies.

Section 2: Top 6 Tips to Protect Your Deposit: What to do to make sure you get your full security deposit back (dealing with the biggest reasons for tenants losing part or all of their deposit.) Final cleaning, according to checklist Replacing light bulbs and furnace filters, Final yard cleanup (mowing, trimming, weeding, pruning). Cleaning gutters through an approved vendor Cleaning fireplaces with an approved vendor Top off oil tank if the property has oil heat. Section concludes with a short quiz

Section 3: Know Your Obligations, Avoid Headaches and Fees The following are not all tied to the security deposit refund, but they all cause significant consternation (and sometimes charges) for tenants who arent familiar with their lease and covenants. Tenants are obligated to provide access to the premises at lease end. (Provide a telephone number for Realtors to call before showing.) Making electronic payments. Once logged into Paylease, tenants are no longer on the ABC website. Any issues with payments (e.g., website timeout) must be addressed with Paylease, ABC has no control over them. As Is items. Tenants must be aware of which items are listed as is in their lease and must also be aware of the definition of as is as noted in the Tenant Handbook. (These three are the ones I know about right now. This list might grow a bit.)

Section concludes with a short quiz.

Concluding Section: Invitation to reach out directly with a question or a concern about any of this material. Evaluation of module (short, 5-question survey) Opportunity to print a certificate after all sections/quizzes have been completed.